Tuesday, 21 June 2011

The contemporary economic system seems broken. It's time for something new.

The general sense of economic malaise persists. Let’s create a Cloud Dollar web based economy.
by Tom Thorne

When Canadian Prime Minister Stephen Harper says the current alleged economic recovery remains “fragile”, I think he is telling us to prepare for another downturn. The signs are everywhere. Blackberry maker Research in Motion is laying off staff and retooling their battle with Apple iPhone and other smart phone competitors. The Canadian federal government is cutting staff and playing hard back to work legislative games with its labour unions. In addition, the Obama administration is hovering on a budget supply crisis that could shut down the Government of the United States. Also, North American personal debt loads are the highest in history.
Add to this that the stock markets have been down for six weeks as confidence wanes. Youth unemployment among the well educated stubbornly continues wasting brains and talent. The creaking economic system seems poised for another correction probably brought on by record government debt, and especially the debt crises in Europe focusing on Ireland, Greece, and Portugal. 
After the last Meltdown nothing really substantial happened to rebuild the economy except governments printed money as  their meagre response to maintain the economic status quo. The mess financial institutions created with their shabby reselling of doubtful mortgages and other junk paper has gone largely uncorrected. That leaves a lot of people still suffering as a result with home foreclosures and stubborn joblessness.
Traditional economics is in the hands of fools
Unemployment remains high and growing.  Economies like China fix the exchange rates of their currencies with other world currencies helping to mount up debt for the Western world who buy their goods. It’s a kind of economic warfare where debt is held to maintain the status quo. There is no way that Chinese nine percent growth rates can be sustained without the world economy buying their goods as we and the Chinese all found out during and after the Meltdown. However, the Chinese continue their same economic policies of fixed currency exchange with no relief in sight.
The Chinese were shocked when they learned about a free economy’s “unseen hand” as their overheated economic activity and blatant use of resources began to slip when customer demand fell off in the West.  And although Chinese internal demand is large because people there still want to escape poverty as their main goal, it needs a lot of work to really serve the internal demand of the bulk of the Chinese population. 
It’s better for the Chinese government to export rather than serve the poor of their own countryside. The Chinese poor’s daily survival is a long way from building a middle class lifestyle that a few Chinese experience inside their hermetically sealed economic zones. Internal Chinese “progress” is a house of cards as long as a two-tiered economy is allowed to continue.
If the US can’t pay its way and continues to run up multi trillion dollar deficits, the result will be a devaluation of the American dollar as a world standard.  It is doubtful that the Yuan from China will gain world confidence in its inflated form and the Euro is also remain under pressure with defaulting countries along with the debt ridden British economy and its weakened Pound. There is only so much shoring up that Europe can do to stem economic collapse.
The modest proposal
Perhaps it is time for a virtual currency to arise on the web to really become the world standard. We could call this new virtual currency The Cloud Dollar. We could open virtual banks and capitalize them with Cloud dollars and if we could all agree to use them, then this new virtual currency could become the world standard.
Imagine logging onto iTunes for your favourite music or app and using Cloud Dollars to buy your choices? Why not? A Cloud Dollar is every bit as good as a US dollar or a credit card that is mired in debt. The US dollar could be renamed President Pictures and become collector’s items. 
Here’s how this new economy would start up. If you have an internet connection that is in your name, then you get a credit of 1000 Cloud Dollars which is equivalent to the value of $1000 US dollars. You start the ball rolling in this virtual economy by banking your 1000 Cloud Dollars in a Cloud Bank of your choice where you are paid 100 more Cloud dollars for making a deposit and interest of 3 percent per annum on balances.
You are laughing now aren’t you?  Well if you accept Cloud Dollars as a medium of exchange on the internet to start the internet economy you will be removed from all the current nonsense we have in the alleged “real economy”.  Each web transaction can only be made in Cloud Dollars. You start this economy going by spending and circulating your Cloud Dollars.
Cloud Banks can generate money. For each Cloud Dollar on deposit they can lend or create capital on a 5 to 1 ratio.  So your $1000 Cloud Dollar deposit in a Cloud Bank generates $5000 Cloud Dollars to lend out. If you need more Cloud dollars then you go to a Cloud bank for a loan. This Cloud money lends out at five percent. So the Cloud banks get a two percent spread. Since they are fully automated on Cloud servers they don’t have huge costs to cover.
Cloud loans are given to start up web businesses that use only Cloud dollars for their transactions. Soon people in the “real economy” will offer products and services in the Cloud Mall which will only be available on line for payment in Cloud dollars. When this happens Cloud Dollars will take on a value the same as any currency.
Cloud dollars made on the web will only be banked in Cloud banks and then loaned out at the 5 to 1 ratio to create more Cloud economic activity. This circumnavigates the now passé currencies of the US dollar, Euro, Pound and Yuan. 
Soon there will be Cloud entrepreneurs and likely Cloud millionaires. They will create more economic activity on the web. Imagine a Cloud Exchange where valuable companies with great ideas will be capitalized without Wall Street, or any other entity of the old economic order. Is it a dream? You be the judge.
© Copyright, Tom Thorne, All Rights Reserved

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